Ontario
As an employee
$53,008
take-home / year
Employer pays half your CPP. You pay EI.
As self-employed
$50,174
take-home / year
You pay both CPP halves. No EI by default.
On $70,000, self-employment takes home $2,834 less than the same salary — that's the employer's CPP half you now cover, minus the EI you skip. The fix isn't to avoid self-employment — it's to price for it.
Income tax (both)
$11,912
CPP — employee vs both
$3,957 vs $7,914
EI (employee only)
$1,123
Estimate only — same 2026 federal + provincial brackets and Basic Personal Amount both sides; self-employed pay both CPP/QPP halves (11.9% / 12.6% QC), employees pay one half + EI (1.63% / 1.30% QC, max $68,900 insurable). Doesn't model deductions, employer benefits, or self-employment write-offs. Not tax advice.
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The real cost (and upside) of working for yourself
On the same headline income, self-employment takes home a little less — and it surprises almost everyone the first year. The culprit isn't income tax (the brackets are identical); it's CPP. As an employee, your employer quietly pays half your CPP. On your own, you pay both halves — 11.9% in 2026 (QPP 12.6% in Quebec). You do skip mandatory EI, which softens it.
But the headline number is the wrong comparison. Self-employment lets you deduct real business expenses an employee can't, set your own rate, and earn with no ceiling. The losers price like employees; the winners price for the full cost. Two tools make that concrete: the freelance rate calculator (what to charge to clear the gap) and the tax set-aside calculator (so the tax is waiting when it's due).
Thinking of making the leap? Read sole proprietor vs incorporation, how self-employed CPP works, and what you can write off.
People also ask
Do self-employed people take home less than employees on the same income?
Usually yes, slightly — on $70,000 in Ontario, self-employment takes home about $2,834 less than the same salary. The reason is CPP: an employer pays half your CPP when you have a job, but when you're self-employed you pay both halves (11.9% in 2026; QPP 12.6% in Quebec). You do skip mandatory EI, which offsets some of it. The gap is the real cost of being your own employer — and it's why your freelance rate has to be higher than your old salary.
Do self-employed people pay more tax than employees?
Not on income tax — the federal and provincial brackets and the Basic Personal Amount are identical whether you earn the money as salary or self-employment. The difference is payroll: self-employed pay both halves of CPP/QPP and no automatic EI, while employees pay one CPP half plus EI. Self-employed people can also deduct legitimate business expenses, which employees generally cannot — so with real expenses, self-employment can come out ahead.
Is self-employment worth it financially in Canada?
It depends on your rate and your expenses, not just your income. On the same headline number, self-employment nets a bit less because you cover both CPP halves. But you control your rate, you can deduct business expenses an employee can’t, and there’s no ceiling. The trap is pricing like an employee; the win is pricing for the full cost — use the freelance rate calculator to set a rate that more than closes the gap.
Do self-employed people pay EI in Canada?
Not automatically. EI is mandatory for employees (1.63% in 2026 outside Quebec, 1.30% in Quebec, on insurable earnings up to $68,900) but optional for the self-employed — you only pay it if you register to opt in for EI special benefits (maternity, parental, sickness, caregiving). This comparator assumes the self-employed person does not opt in, which is the common case.
How is this take-home comparison calculated?
Both sides use the same verified 2026 federal + provincial tax brackets and Basic Personal Amount. The employee side subtracts income tax, the employee half of CPP/QPP, and EI; the self-employed side subtracts income tax and both CPP/QPP halves (no EI). It’s an estimate — it doesn’t model RRSP, employer benefits, or self-employment deductions — so treat the gap as directional, not a filed figure.
Self-employment, without the dread.
VRITTI tracks your income, sets aside your tax automatically, and keeps your books calm — so the only surprise at tax time is how ready you are.
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